For full text article go to : http://www.educorporatebridge.com/securitization/securitization-of-assets This Article explain concepts like securitization of asset, meaning of securitization in layman language, ABS,MBS,CDO,CMO etc.
2. Securitization is the process conversion of
receivables and cash flow generated from a
collection or pool of financial assets like
mortgage loans, auto loans, credit card
receivables etc into the marketable securities.
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4. Asset securitization is the process whereby
interests in loans and receivables are packaged
and sold in the form of ABS asset backed
securities.
Asset Securitization
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9. Asset back securities (ABS)
Asset-backed securities are the bonds or notes
backed by some financial assets. These assets
consist of receivables such as mortgage loans,
credit card receivables, auto loans,
manufactured-housing contracts and home-
equity loans.
10. Collateralized debt obligation
It is an investment grade security backed by a pool of various
other securities.
Mortgage-backed securities (MBS)
Mortgage-backed securities are bonds that are backed by pools
of mortgage loans. Examples Mortgage papers, house papers,
land and Property papers.
12. Difference between MBS and ABS
No. MBS ABS
1 The Duration for
trading is more than 15
years.
The Duration for
trading is up to 5 years.
2 Securities: Mortgage
papers, house papers,
land and Property
papers.
Securities: Credit card
papers, Share
certificates, Auto or
vehicle papers.
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